UNION BUDGET 2015-16

KEY TAKEAWAYS FROM THE BUDGET

Union Budget 2015-16

INTRODUCTION

Finance Minister Arun Jaitley on February 28, 2015 presented a growth-focused budget for
2015-2016 without tripping on the fiscal deficit that usually constrains Finance Ministers.

Credibility of Indian Economy has been re-established in the last nine months i.e.
Economic environment far more positive than in the recent past
Forecast for Growth has been upgraded and the economy to take off on a fast
growth trajectory
States more economically empowered and are equal partners to Indian Economic
growth
After inheriting an economy with sentiments of doom and gloom with adverse
macro-economic indicators, nine months have seen a turn around, making India
fastest growing large economy in the World with a real GDP growth expected to
be 7.4 per cent (New Series)
Several measures were taken to energize the economy

THREE KEY ACHIEVEMENTS

Success of Jan Dhan Yojana- 12.5 crores families financially included in 100 days
Transparent Coal Block auctions to augment resources of the States
Swachh Bharat is not only a programme to improve hygiene and cleanliness but
has become a movement to regenerate India (50 lakh toilets constructed and 5
crore is the set target)

STATE OF THE ECONOMY

INFLATION

One of the achievements of the Government has been to conquer inflation

1
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

CPI inflation projected to remain close to 5% by March end, consequently

opening room for more monetary policy easing
Monetary Policy Framework Agreement with RBI to keep inflation below 6%

GROWTH

GDP forecast based on the revised series is pegged at 7.4 per cent in 2014-15 in
the light of forecast inflation rate at 5 per cent by March 2016 as against the
Reserve Bank of India's 6 per cent target
Annual inflation rate was 5.1 per cent in January, 2015.
GDP growth rate would accelerate to between 8 and 8.5 per cent in 2015-16
(starting April 2015) based on the new series
Aiming double digit growth rate

FISCAL ROADMAP

With improved economy, pressure to accelerate fiscal consolidation too has

decreased
Fiscal deficit target of 3% will be achieved in 3years rather than 2 years
The fiscal deficit targets are 3.9 per cent, 3.5% and 3.0% in FY 2015-16, 2016-17
and 2017-18 respectively
Present fiscal deficit target for 2015-16 at 3.9 per cent of GDP is above the 3.6 per
cent target inherited from the last government
Additional fiscal space will go to funding infrastructure investment
Current account deficit below 1.3 percent of GDP
Jaitley says have to keep fiscal discipline in mind despite need for higher
investment

REVENUES

Revenue deficit seen at 2.8 per cent of GDP

Non-Tax Revenue seen at 2.21 trillion rupees

2
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

Agricultural income are under stress

DISINVESTMENT

Disinvestment to include both investment in loss making units and some strategic
disinvestment
Government targets 410 million rupees from stake sales in companies
Total stake sale in 2015-16 seen at 695 billion rupees

MARKET REFORMS

Amendment of the RBI Act to provide for a Monetary Policy Committee

(Unlike many major central banks which have a monetary policy committee
which decides interest rates, India has had a technical advisory committee with a
few outside experts with the RBI Governor taking the final call for around a
decade).
Once amended, the new monetary policy framework agreement will bind the
Central Bank to commit to keeping inflation below 6 per cent which, going by
past records, is reckoned to be an acceptable target with a potential growth of over
7 per cent

Forward Markets Commission to be merged with Securities Exchange Board of

India (SEBI)
An autonomous Bank Board Bureau to be set up to improve the governance of
public sector banks
(In order to improve the Governance of Public Sector banks, the Government
intends to set up an autonomous bank Board Bureau. The Bureau will search and
select heads of Public Sector banks and help them in developing differentiated
strategies and capital raising plans through innovative financial methods and
instruments. This would be an interim step towards establishing a holding and
investment Company for Banks)
Introduction of Bankruptcy Code

3
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

(Since SICA (Sick Industrial Companies Act) and BIFR (Bureau for Industrial and
Financial Reconstruction) have failed in achieving speedy disposal of bankruptcy
law, and its objectives, the government will bring a comprehensive Bankruptcy Code
in fiscal 2015-16, that will meet global standards and provide necessary judicial
capacity)
Public Debt Management Agency (PDMA) bringing both external and domestic
borrowing under one roof to be set up this year
Amending the Government Securities Bill Act and the RBI Act included in the
Finance Bill, 2015
Section-6 of FEMA to be amended through Finance Bill to provide control on
capital flows as equity will be exercised by Government in consultation with RBI
Indian Financial Code to be introduced soon in Parliament for consideration
Introduction of a public contract resolution of disputes bill

POLICY REFORMS

To enact a comprehensive new law on black money

KEY FEATURES OF NEW LAW ON BLACK MONEY

Evasion of tax in relation to foreign assets to have a punishment of rigorous

imprisonment upto 10 years, be non-compoundable, have a penalty rate of 300% and the
offender will not be permitted to approach the Settlement Commission
Non-filing of return/filing of return with inadequate disclosures to have a punishment of
rigorous imprisonment upto 7 years
Undisclosed income from any foreign assets to be taxable at the maximum marginal rate
Mandatory filing of return in respect of foreign asset
Entities, banks, financial institutions including individuals all liable for prosecution and
penalty
Concealment of income/evasion of income in relation to a foreign asset to be made a
predicate offence under PML Act, 2002
PML Act, 2002 and FEMA to be amended to enable administration of new Act on black
money

4
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

OTHER POLICY REFORMS

Propose to create a universal social security system for all Indians

To launch a national skills mission soon to enhance employability of rural youth
To raise visa on arrival facility to 150 countries from 43
Allocates 346.99 billion rupees for rural employment guarantee scheme

BORROWINGS

Gross market borrowing seen at 6 trillion rupees

Net Market borrowing seen at 4.56 trillion rupees

INVESTMENT

Foreign Investments in Alternative Investment Funds to be allowed

Distinction between different types of foreign investments, especially between foreign
portfolio investments and foreign direct investment to be done away with. Replacement
with composite caps
A project development company to facilitate setting up manufacturing hubs in CMLV
countries, namely, Cambodia, Myanmar, Laos and Vietnam in order to catalyze
investments from the Indian private sector in South East Asia under Act East policy
Public Investment needed to catalyse investment

BUDGET ESTIMATES

Non-Plan expenditure estimates for the Financial Year are estimated at `13,12,200 crore
Plan Expenditure is estimated to be `4,65,277 crore, which is very near to the R.E. of
2014-15
Total Expenditure has accordingly been estimated at `17,77,477 crore
The requirements for expenditure on Defence, Internal Security and other necessary
expenditures are adequately provided
Gross Tax receipts are estimated to be `14,49,490 crores
Devolution to the States us estimated to be `. 5,23,958

5
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

Share of Central Government will be ` 9,19,842

Non Tax Revenues for the next fiscal are estimated to be `2,21,733 crores
Fiscal Deficit will be 3.9 per cent of GDP and Revenue Deficit will be 2.8 per cent of
GDP

AGRICULTURE

Soil and Water are two major factors critical to agricultural production major steps
taken to address them
Paramparagat Krishi Vikash Yojana to be fully supported
Pradhanmantri Gram Sinchai Yojana to provide Per Drop More Crop
`5,300 crore to support micro-irrigation, watershed development and the Pradhan Mantri
Krishi Sinchai Yojana
` 25,000 crore in 2015-16 for Rural Infrastructure Development Fund (RIDF) set up in
NABARD
15,000 crore for Long Term Rural Credit Fund; 45,000 crore for Short Term Co-
operative Rural Credit Refinance Fund; and 15,000 crore for Short Term RRB Refinance
Fund
Target of ` 8.5 lakh crore of agricultural credit during the year 2015-16
Focus on improving the quality and effectiveness of activities under MGNREGA.
`.34,699 crore has been earmarked for the programme i.e. `. 5,000 crore additional
allocation from the previous year
Government to work with the States, in NITI, for the creation of a Unified National
Agriculture Market for farm produce to benefit farmers. Such markets will also have the
incidental benefit of moderating price rises
Transportation of agricultural produce to remain exempt from Service tax

FUNDING THE UNFUNDED

6
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of `.

20,000 crores and credit guarantee corpus of `3,000 crores will refinance micro finance
organizations to encourage first generation SC/ST entrepreneurs (In lending, priority will
be given to SC/ST enterprises)
MUDRA Bank will be responsible for refinancing all Micro-Finance Institutions which
are in the business of lending to such small entities of business through a Pradhan Mantri
Mudra Yojana
A Trade Receivables discounting System (TReDS) which will be an electronic platform
for facilitating financing of trade receivables of MSMEs to be established. This should
improve the liquidity in the MSME sector significantly
Comprehensive Bankruptcy Code of global standards to be brought in fiscal 2015-16
towards ease of doing business
Postal Network with 1,54,000 points of presence spread across villages to be used for
increasing access of the masses to the formal financial system
NBFCs registered with RBI and having asset size of `.500 crore and above to be
considered as Financial Institutions under SARFAESI ACT, 2002 enabling them to
fund SME and mid-corporate businesses
A separate 7.5% sub limit is being under priority sector lending for MSMEs

WELFARE SCHEMES
Govt. to create universal social security system for all Indians
Govt to use `. 9000 crore unclaimed funds in PPF/EPF for Senior Citizens Fund

(The unclaimed deposits of about ` 3,000 crore in the PPF, and approximately `.6,000 crore in
the EPF corpus will be used for the creation of a Senior Citizen Welfare Fund, in the Finance
Bill, for appropriation of these amounts to a corpus which will be used to subsidize the premiums
of vulnerable groups such as old age pensioners, BPL card-holders, small and marginal farmers
and others)

INFRASTRUCTURE

7
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

Investment in Infrastructure sector will go up by nearly 700 billion rupees in 2015-16

Sharp increase in outlays of roads and railways (additional 100,000 km of road to be
built). Capital expenditure of public sector units to also go up
National Investment and Infrastructure Fund (NIIF) to be set up with an annual flow of
`20,000 crores to it
Tax Free Infrastructure Bonds for the projects in the rail, road and irrigation sectors
PPP mode of infrastructure developments to be revisited and revitalized and Government
to bear majority of the risk
Atal Innovation Mission (AIM) to be established in NITI to provide Innovation
Promotion Platform involving academicians, and drawing upon national and international
experiences to foster a culture of innovation, research and development. Sum of ` 150
crore will be earmarked
Concerns of IT Industries for a more liberal system of raising global capital, incubation
facilities in our Centres of Excellence, funding for seed capital and growth and ease of
doing business etc. would be addressed for creating hundreds of billions dollars value
(SETU) Self Employment and Talent Utilization to be established as Techno-Financial,
incubation and facilitation programme to support all aspects of start-up business. `. 1000
crore to be set aside as initial amount in NITI
Launching of a National Skills Mission through the Skill Development and
Entrepreneurship Ministry. The Mission will consolidate skill initiatives spread across
several Ministries and allow to standardize procedures and outcomes across 31 Sector
Skill Councils.
Government had launched the Deen Dayal Upadhyay Gramin Kaushal Yojana with a
fund of `. 1,500 crore scheme to give employment to rural youth who constitute 70 per
cent of Indian population. Disbursement will be through a digital voucher directly into
qualified students bank account.
Ports in Public Sector will be encouraged, to corporatize and become companies under
the Companies Act to attract investment and leverage the huge land resources

8
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

An Expert Committee to examine the possibility and prepare a draft legislation where the
need for multiple prior permission can be replaced by a pre-existing regulatory
mechanism. This will facilitate Indian to become an Investment destination
5 New Ultra Mega Power projects, each of 4000 MW, in the Plug and Play mode. This
will a measure towards ending chronic power shortages

BANKING SECTOR AND FINANCE

Government to infuse `.7940 crore to Public Sector Banks as capital in FY 2016

Under PM Jan Dhan Yojana scheme, over 11 crore Rupay Cards issued as on Jan 31,
2015. Banks can encourage customers to go digital with their transactions.
One way to curb the flow of black money is to discourage transactions in cash
Several measures to be introduced to incentivize credit or debit card transactions and dis-
incentivize cash transactions (Amount of cash floating in the system is estimated at about
18 per cent of the countrys GDP, making India one of the most currency dependent
countries in the world)
Direct Transfer of Benefits to be extended to increase the number of beneficiaries from 1
crore to 10.3 crore
Proposal to create a Task Force to establish sector-neutral financial redressal agency that
will address grievance against all financial service providers
Vision of putting in place a direct tax regime, which is internationally competitive on
rates, without exemptions
Government to bring enabling legislation to allow employee to opt for EPF or New
Pension Scheme. For Employees below a certain threshold of monthly income,
contributing to EPF to be option, without affecting employees contribution

MONETISING GOLD

India is one of the largest consumers of gold in the world and imports as much as 800-1000
tonnes of gold each year. Though stocks of gold in India are estimated to be over 20,000 tonnes,
mostly this gold is neither traded nor monetized. The government proposes to introduce

9
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

Gold monetization scheme to allow the depositors of gold to earn interest in their metal
accounts and the jewelers to obtain loans in their metal accounts to be introduced
Sovereign Gold Bond, as an alternative to purchasing metal gold scheme to be developed
Introduce an Indian Gold Coin with Ashoka Chakra on its face to reduce the demand for
foreign coins and recycle the gold available in the country

TAX PROPOSAL

An increase in basic tax exemption limit and a raising of tax slabs is the usual expectation of the
Aam Aadmi.

During his Budget speech, Finance Minister Arun Jaitley said an individual tax payer can
claim tax benefits for up to Rs. 4, 44,200 in addition to the tax exemption

Deductions under 80C `. 1,50,000

Deductions under 80CCD for contribution to NPS `. 50,000

Interest on house property loan (Self Occupied Property) `. 2,00,000

Exemption with new transportation allowance of Rs. 1,600 per month `. 19,200

Deduction under 80D on health insurance premium `. 25,000

Total `. 4,44,200

Union Budget 2015 raises tax deduction limit to `. 4.44 lakh for Income Tax payers
No change in Tax slabs
Additional deduction of `. 25,000 for differently abled persons
Educational Cess and higher educational Cess to be subsumed as a part of GST

10
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

EPF - Employee may opt for EPF or new pension scheme, employee's contribution to
EPF below an income threshold will be optional without reducing employer's
contribution
Abolition of Wealth Tax
(Total wealth tax collection was `. 1,008 crore in 2013-14. Government therefore
decided to abolish the wealth tax and replace it with an additional surcharge of 2 per cent
on the super-rich with income of over `. 1 crore. This will lead to tax simplification and
widening the tax base. As against a tax sacrifice of `. 1,008 crore, through these
measures, the Department would be collecting about `.9,000 crore from the 2 per cent
additional surcharge)
Rate of corporate tax to be reduced to 25 per cent over next four years from 30 per cent
earlier
No change in tax slabs
Total exemption of up to `. 4, 44,200 can be achieved
100% exemption for contribution to Swachch Bharat apart from CSR
Service tax increased to 14 per cent
Yoga to be included within the ambit of charitable purpose under Section 2(15) of the
Income-Tax Act

NORTH EAST

Vision for Team India led by PM

Development of Eastern and Northeastern Regions on par with the rest of the country
Centre of film production, animation and gaming to come up in Arunachal Pradesh
AIIMS to be set up in Assam
Institute of Science and Education Research to be set up in Nagaland

11
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

Budget at a Glance
(In Crore of Rupees)
2013-20142014-2015 2014-2015 2015-2016
Actuals @Budget Revised Budget
Estimates Estimates Estimates
1 2 3 4 5 6
Revenue Receipts 1014724 1189763 1126294 1141575
Tax Revenue (net to
2 centre) 815854 977258 908463 919842
3 Non-Tax Revenue 198870 212505 217831 221733
Capital Receipts
(5+6+7)$ 544723 605129 554864 635902
5 Recoveries of Loans 12497 10527 10886 10753
6 Other Receipts 29368 63425 31350 69500
Borrowings and other
7 liabilities * 502858 531177 512628 555649
Total Receipts (1+4)$ 1559447 1794892 1681158 1777477
Non-Plan Expenditure 1106120 1219892 1213224 1312200
10 On Revenue Account 1019040 1114609 1121897 1206027
of which,
11 Interest Payments 374254 427011 411354 456145
12 On Capital Account 87080 105283 91327 106173
Plan Expenditure 453327 575000 467934 465277
14 On Revenue Account 352732 453503 366883 330020
15 On Capital Account 100595 121497 101051 135257
Total Expenditure
(9+13) 16 1559447 1794892 1681158 1777477
Revenue Expenditure
17 (10+14) 1371772 1568111 1488780 1536047
Of Which, Grants for
18 creation of Capital Assets 129418 168104 131898 110551
Capital Expenditure
19 (12+15) 187675 226781 192378 241430

Revenue Deficit (17-1) 357048 378348 362486 394472

RD as per cent of GDP -3.1 -2.9 -2.9 -2.8
Effective Revenue
Deficit (20-18)# 227630 210244 230588 283921
ERD as per cent of GDP -2 -1.6 -1.8 -2
Fiscal Deficit {16-
(1+5+6)} 502858 531177 512628 555649
FD as per cent of GPD -4.4 -4.1 -4.1 -3.9

12
 UNION BUDGET 2015-16
KEY TAKEAWAYS FROM THE BUDGET

Primary Deficit (22-11) 128604 104166 101274 99504

PD as per cent of GDP -1.1 -0.8 -0.8 -0.7
@: Actuals for 2013-14 in this document are provisional.
$: Excluding receipts under Market Stabilisation Scheme.
*: Includes draw-down of Cash Balance.
Note: 1. GDP for BE 2015-2016 has been projected at Rs14108945 crore assuming 11.5 per cent growth over
the Advance Estimates
of 2014-2015 (Rs. 12653762 crore) released by CSO.
2. Individual items in this document may not sum up to the totals due to rounding off.

13